Over the years my income and my situation in general has gotten more andmore complicated. I'm at a point where I feel that the tax guy I have used for the past 15 years is no longer qualified to address my needs.

These are some of the things I have:

- income from job
- rental income (This is one point I have always felt I should be getting more deductions)
- dependents
- 401K and other pretax deductions (FSA, DCA, HSA, etc)
- education expenses
- donations

I'd like to work with someone who can help me all my deductions and all the allocations I need to do before the end of the year. Someone who can evaluate all my options and advise accordingly. My question is, is a forum like this, or the internet in general, a good way to find such a person? Now that I'm writing this, I'm thinking that perhaps what I need is a financial planner with significant tax savvy, instead of a new tax filling person.

If the option is to get a financial planner, would a couple of sessions per year be enough. I don't want to pay someone on a monthly basis. Oh, I'm also quite savvy myself and can say I'm beyond novice when it comes to personal finance.

Peter

Your taxes are rather straight forward.

-401k, HSA etc comes right off on the W2.
-Dependents are taken care of if you can read and manage to make it through a form 1040.
-Rental, schedule E. You'll also need form 4562, as the gubimint likes to keep track of the amount you are depreciating (and will want it back if your property in fact appreciates when ever the place is sold). You may need a schedule C.
-education expenses, depends on who it is for and how much. forms 8863 and/or 8917

Just my 2 cents, but you should learn all this stuff for yourself. I know many CPA's who are idiots and make simple but costly mistakes for their clients. How do I know? While I have a good handle on tax filing and can usually figure things out, I was being lazy a couple years ago. Now I am in the middle of an audit. And I have come to the conclusion that it isn't worth the money to pay some to prepare your taxes and then spend as much time going over it with a fine tooth comb.

If you do still want to use a CPA, you need go over all their work. AND I most definitely wouldn't take recommendations from random people online.

Thanks Bichon. I already use all those forms you mentioned and I already know how they work. I have done plenty of reading and there isn't anything on my return that I don't understand. What I'm missing is the things I don't know about. In other words, the help I need is strategic. It's someone telling me, given your income and your situation, you should consider doing such and such.

Thanks for your suggestion NOT to go with people recommended online. I guess that mutes the whole post, but at least it elicited this conversation.

One clear idea has come out of this, I need a good CFP.

Disagree wholeheartedly about the CFP.

I don't understand what you are trying to do. Do you think you are entitled to further tax breaks? Or do you want to figure out how to get more tax breaks? There are very few tax deductions/credits where you come out ahead. Either you need to be below a certain income level (aka "poor") or you need to spend money. Neither of which, I am willing to do. You could always gives your eyes a nice acid bath and that would earn you another deduction.

Or, do you want to be one of those people who think they can set up a corporation, have it own their home and write everything off? That certainly makes great fodder across the driveway, but it is skeptical at best. In my opinion, it is against many rules and a nice audit from the IRS would certainly set them straight, methinks.

So, what are your expectations here? To end up paying the AMT?

You keep saying that, but it's not true. Furthermore, even the breaks related to spending may be for some things you are already doing. It's even possible (hard to believe as it may be to you) that a tax break may make a certain action profitable to a person (or corporation) where it wouldn't be without the break.

Interesting, such as?

I am sure there are some that exist (which is why I said there are very few that exist). As a small business owner and someone with a "joe job" and works with the accounting/economics etc for projects ranging from the $10's of millions to the $10's of billions, I have yet to see any decision made where the tax deduction was the "tipping point" or the main reason for doing a project. The closest I have ever come is a 12 billion dollar project I worked on where the point of sale occurred for the good had a high impact on project economics.

In my small business, early on we got caught up doing things b/c of the "tax deduction." And we found out we were spending too much money collecting "things" we didn't really need opposed to paying taxes and having money in the bank. We're in our 12th year of business.

So, perhaps my wording was poor. My point is, if you are collecting deductions and credits for the sake of it, you're probably making poor decisions. To me, they have always been "icing on the cake" and the decisions made stand on their own merits and independent of the tax deductions. E.g. I wouldn't force my kids to go to college just so I could take credits/deductions. Another example, we unfortunately are over the amount for the standard deduction every year. Certainly, I wish we could take the standard deduction, but since we make decisions independent of if we get a tax "break" or not, we still claim over the standard deduction. OR, are actions are not based on getting a bigger tax deduction.

YMM will certainly V.

We are in a similar position to you (OP) and also wish we could find ways to legally pay less in tax. We do use a paid preparer. She has been reasonably helpful over the years, especially with our rental. One of the things she did was make us aware of a couple of tax court decisions where the IRS lost but STILL, after over 20 years, will not admit that it's interpretation of the law as written in the relevant publication is wrong. But it has also not challenged the particular situation on the record since that time. One of those deductions alone saves us over $1000 a year. We pay our preparer about $200 a year to file a return that is about 1/2 inch thick. We must file in 3 states. That includes efile fees. If we paid turbo tax we'd likely spend about the same.

But, I would also say that Bichon is mostly right - you don't really need one in most cases. You can read the pubs yourself and learn what you need to know. I go through our returns in detail every year to learn what every entry is about and that helps planning for the future.

Where I disagree with Bichon (and agree with Stannius) is that there can be situations where there are net positives, mostly because of credits and duplication between state and federal things. But those are fairly easy to find.

I also don't think you really need a CFP. I am not as opposed to professionals as many on this forum but your situation, like ours, is really not that complicated. Meeting with a CFP might give you a little confidence boost but I doubt it will help you make any significant changes that actually put you in a better position or save you money.

Good luck.

Bichon, I generally agree with your conclusion that decisions have to be made on their own merits before bringing the tax management into play. But I'll give you three examples where the tax deductions and credits can be used to soften costs or even make a slight positive amount.

1. I used to be an executive in a business. We routinely spent money on various sorts of training and we could fully deduct it of course. We got a new guy in who was really good at getting workforce development grants. We ended up getting training 90% paid for by our state through "grants" yet could still deduct the cost of training for federal taxes so that we actually made money by sending people to training.

2. Same business. I traveled a lot doing business development. Many of our projects were federal. Under the FARs my travel expenses pre contract had to be treated a certain way. So I always combined trips with visits to non-fed prospects/customers in the same areas. The tax savings added up.

3. Personally, our state offers quite a few credits that are also federal deductions. So I can donate to working poor for example and directly reduce my state taxes while also taking a federal deduction. That means I effectively make about 1/3 of my donation as positive cash flow. I can do this for a total of about $1000 a year ($3000 in donations) in my state.

The point is, I agree in principle that decisions have to stand on their own. But fine tuning the details can lead to relatively significant savings because of tax rules.

I don't want to set up a corporation and have it own my home and write everything off.

I do think there may be further tax breaks that I'm not taking advantage of. If there aren't any, and I'm already taking advantage of all that ARE available to me, then case closed.

Regarding getting a CFP or not, I'm inclined to do most things on my own and just learn (study) a subject or situation until I'm capable of making the best decision. The problem comes when a body of knowledge is just too wide and it will take me years to get around it, only to use 3 or 4 "techniques" from it. Certain cases are best left to a professional.

Also, and this is no offense to professionals, many times, because I tend to focus and dissect problems in a very analytic manner, I end up understanding it better than many average/mediocre people who do it for a living. I don't mean this in an arrogant way.

I'm all for a DIY approach when applicable. This case, the jury is still out.

Back to the library......

Understood. We are looking at putting a geothermal heating/cooling system into our home. BIG tax credits (state and federal) for doing so. BIG BIG price tag as well. Our overall objective is to save money, second do some good for the environment. If the tax credits help, sure. But, there is a difference of finding a tax credit and then doing something to earn the credit/deduction versus wanting to do something and having the tax credit/deduction help with the cost.

Again, a lot of deductions credit are things where you spend money and part of the cost is offset. Minimizing taxes is not the goal. Otherwise, I'd sit at home (if I still had one) and let the gubimint take care of me.

Here's what I'd do. Either read read read, and read some more. Especially financial sites (all kinds) and even a "deals" forum like fatwallet (occasionally someone will figure a loophole and realize you can do something like buy an electric golf-cart that's technically a car, and get enough of a tax credit to pay for it). Or, go to a financial planner and a tax adviser at least once a year and get the skinny (maybe twice...once toward the beginning of the year, and again toward the end...lots of times tax laws aren't made until the end of the year, which can be pretty frustrating).

Yeah, a lot of the deductions/loopholes/whatever may only be beneficial if you have unique circumstances. But we're all unique, right? Maybe you take a lot of business trips, and if you just do one small thing different you can have a much bigger deduction. Maybe you own a home and have a long list of things you'd like to fix/replace...see if there's a tax incentive for some of the repairs (and if so, move those to the top of the list...if not, then move them toward the bottom).

Heck, some people will come out ahead to rent a place that they rarely spend time at. I won't get into boring details right now, but basically if renting a cheap apartment keeps you from being an itinerant worker, you might save big bucks on your tax bill, more than enough to offset the actual rent you're paying while not even living there. We've kinda-sorta done that, except we bought instead of rented. If we continued doing that, it wouldn't take too terribly long for the tax savings to pay for the house. Unique situation, yes; but like I said, we're all unique

This is going to sound silly but I did exactly what josetann suggested, read, read and read. I checked out "How to Pay Zero Taxes" by Jeff Schnepper and "Beating the IRS" by Roni Deutch.
.
First of all, don't let titles mislead you. Both of these books are written by competent authors, both CPAs and both with advanced studies in taxation. Neither of them advocates for cheating or pulling a fast one. What they do is list and explain all possible deductions. I liked Roni's book better because it was easier to read. Schnepper's felt more like an encyclopedia, but I learned much from both.
.
In summary, I'm already taking all the deductions that apply to me but I'm still short 3K to be at the spot where I want to be. This would allow me to save on a Roth IRA and NOT loose many other deductions.
.
Any ideas? My last resort will be to give more to charity (already doing that) or to sell some underperforming stock to generate a loss of 3K. Please reply with your idea.
.
Peter

Isn't this pretty much a standard tactic/annual task?

Question (and my main point): What is better, paying taxes on $3000 or spending $3000 to get a deduction?

$3000 sale of stocks should do it, just beware of wash sale rules.

Why is 3k lower the magic number?